The Infrastructure and Investment Department of the Government of Andhra Pradesh has accorded permission to Gangavaram Port, located near Visakhapatnam, to set up an LNG terminal in joint venture with Petronet.

The Government, while clearing the project proposal to construct and operate a 5 MMTPA LNG terminal with a provision to expand to 10 MMTPA with Petronet LNG, has decided not to allow Gangavaram Port to collect water front charges.

Gangavaram Port had earlier informed that they had already entered into a term sheet agreement with Petronet LNG Ltd in May 2012 for establishing an LNG terminal, which is likely to be operational by 2016. The port wanted to collect water front charges at Rs 103.68 per tonne of LNG cargo handled, with escalation clause.

A Government order issued late on Monday said the decision to accord permission is based on consultations with law and finance departments and empowered group of ministers. It has also approved allocation of 38 acres of land on licence basis and right to reclaim 82 acres on the water front within the port limits.

The order further directs the joint venture company to submit to the Government the detailed project report submitted to the lenders for achieving financial closure.

It also wanted the licence agreement to be entered into by the port authorities to comply with the performance parameters required under the concession agreement.

The Government has accorded permission for another LNG terminal at Kakinada on the coast.

The State Cabinet recently accorded formal approval for the LNG terminals as it sees these two projects having a significant impact on the State, not only facilitating some of the stranded gas plants but also helping develop downstream industries.

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